Last week the chancellor’s centrist approach saw his odds as the favourite for next conservative leader jump from 4/1 to 2/1, which equates to a 33 percent chance that Rishi Sunak will succeed Boris Johnson.
It’s true that for most of the pandemic so far he has been the runaway favourite for the succession, due to the chancellor’s centrist approach to financial aid, which has seen him dominate the centre of British Politics for the past year.
Household Name
One year ago, Mr Sunak was yet to become a household name. He replaced Sajid Javid as chancellor in a last-minute, cabinet reshuffle, just weeks before the 2020 Budget. One year on Mr Sunak has one budget, with his second due on 3 March, two financial statements and several televised pandemic briefings under his belt, all of which has made him one of the most recognisable faces in British politics.
The chancellor’s centrist approach has seen his treasury announce generous support packages for businesses and self-employed, to help them weather the financial climate brought home by lockdown restrictions. We have seen these regularly extended, as it has become apparent that the need for social restrictions would have to remain, in order to curb the various spikes in Covid cases. Despite shortcomings of the chancellor’s centrist approach for specific groups, and eligibility criteria hampering access for newcomers, he has overall managed to hold a popular centre position throughout the pandemic. Another challenge for his forthcoming budget will be retaining that good will, even when he has to announce tough moves such a dialling back of support schemes, it is expected that the pace of which will be the focus.
Lack of Opposition
In his case his popularity of the chancellors centrist approach is boosted by his lack of strong opposition. Which is not particularly due to the relative expertise of shadow chancellor Anneliese Dodd. This is more a symptom of the current financial climate, which offers so little opportunity for stable growth predictions, and remains entirely dependent on the outcome of other rapidly unfolding policies, put in place to dampen the spread of the virus.
She can hardly criticise Mr Sunak for the particulars of his support for one group or another, or for not announcing his measures early enough for the sake of workers’ “certainty”, for fear of advocating further borrowing, which everyone knows will be causing big problems to the treasury of any government long into the future.
“Without further policy action, businesses face a cruel spring of bankruptcy,” said Professor John Van Reenen, of the London School of Economics
(LSE). Warning that approximately 900,000 small firms – employing 2.5 million workers – are at risk of going bust if Covid-19 rescue schemes are wound up too soon.
It is known that the chancellor is keen to start repairing the country’s battered finances with the Budget on 3 March, however research starkly warns that cutting off support schemes too soon would be a disaster. Backed by Gordon Brown, the chancellors centrist approach concludes that business closures threaten to be more than three times higher in the first quarter of 2021 than the equivalent period of 2019. The former labour chancellor and prime minister says, “Governments cannot afford to be behind the curve-especially in a crisis. They have to be at least two steps ahead. Following the blueprint would allow the Chancellor to prevent “the liquidity crisis of 2020 becoming the solvency crisis of 2021.”
Break from Tradition
Traditionally we would expect a conservative treasury to hold back from such a combination of massive state intervention and Keynesian stimulus, but the chancellor’s centrist approach reflects what we could expect a bold labour chancellor would also do. Even the heading ‘Plan for Jobs’ reflects the title of ‘Labour’s Plan for Jobs’ document published in 1986, at a time when a previous conservative government presided over a rate of unemployment even higher than today.
Mr Sunak has confirmed, “At the Budget I will set out the next stage of our Plan for Jobs, and the support we’ll provide through the next phase of the pandemic.”
It is this approach that has allowed Rishi Sunak to dominate the centre region of British Politics for the past year and brought him the popularity he has enjoyed so far. Of course we all eagerly await the Budget on 3 March, and we will be reporting what businesses can expect throughout the year ahead.
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